Owners Corporation Strata Plan 70762 v L and C Platt Constructions Pty Ltd
[2014] NSWCATCD 8
•10 January 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Owners Corporation Strata Plan 70762 v L & C Platt Constructions Pty Ltd [2014] NSWCATCD 8 Hearing dates: 27 August 2013, 28 August 2013, 29 August 2013 Decision date: 10 January 2014 Jurisdiction: Consumer and Commercial Division Before: S Westgarth, Deputy President Decision: 1 The respondent to pay the applicant $47,296.00 within 21 days of the date of this order.
2 Costs reserved pending receipt of written submissions to be filed and served by 29 January 2014 in the case of the applicant and by 7 February 2014 in the case of the respondent.
Legislation Cited: Home Building Act 1989 Cases Cited: Broulee Developments Pty Ltd v Mackay [2008] NSWSC 32
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138CLR423
Ryder v Frohlich [2004] NSWCA 472
Tan Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178Category: Principal judgment Parties: Owners Corporation Strata Plan 70762 (Applicant)
L and C Platt Constructions Pty Ltd (Respondent)Representation: MJ Dawson (Applicant)
M McCall (Respondent)
File Number(s): HB 09/24088
reasons for decision
INTRODUCTION
APPLICANTS CASE (OVERVIEW)
The applicant's contentions are set out in the following paragraphs.
The applicant entered into a contract with a builder (AAC Titwall Constructions Pty Ltd) ("Titwall") which resulted in defective work. The applicants insurer agreed to indemnify the applicant in respect of the defective work of Titwall and the respondent became the builder engaged to rectify the work of Titwall. A contract was entered into between the applicant and the respondent and is dated 9 June 2008 (the "Building Contract").
A copy of the Building Contract appears in Exhibit D page 131.
The building concerns an apartment complex of 3 storeys consisting of three retail shop fronts, 14 residential units and a car park.
The respondent issued an invoice for $6,500.00 addressed to the applicant. That sum constituted the excess under the insurance policy between the applicant and its insurer. The respondent invoiced the applicant the sum of $33,721.00 being the 5% deposit required under the Building Contract. The applicant paid these two sums to the respondent.
The subject of the Building Contract was the rectification work identified by items in a report known as the Sergon report. The respondent quoted in respect of 79 items and a number of items concerning lot 6. The Building Contract referred to those items as the scope of works required to be undertaken by the respondent, and the price for such work was $674,427.00. The respondent commenced the building works and issued invoices for progress payments.
The respondent ceased the building work on 17 November 2008.
On 3 December 2008 the respondent issued a Notice of Suspension of works. The applicant submits that the Notice was issued wrongly and contends that the respondent breached and repudiated the Building Contract by leaving the building site on 17 November 2008 and ceasing the building work.
The applicant appointed a second rectifying builder called Dankav Pty Ltd ("Dankav") to complete the building works for a sum of $1,525,983 plus GST. The applicant seeks damages measured by the cost of completing the works through Dankav less the value of the work the respondent did not perform under the Building Contract. The applicant says that the value of that allowance in favour of the respondent is $425,121.00 (in the applicants post hearing written submissions this figure was $403,864.00) which means that the claim against the respondent is in the order of $1,2000,000. However, the applicant has limited its claim to the limit of the Tribunal's jurisdiction which is $500,000.
Alternatively, the applicant contends that if the contract was not terminated wrongfully by the respondent, the applicant is entitled to the cost of fixing the defective work of the respondent which the applicant assesses at $116,306.80 net of overheads and GST. The applicant also seeks recovery of the excess ($6,500.00) and the deposit ($33,721.00).
In the applicants written submissions received after the hearing the damages claim was identified as being $211,989.00 for works carried out but not performed in accordance with the plans and specifications set out in the Building Contract without an approved variation and $99,000.00 for the cost of rectifying defects.
The applicant also claims interest and costs.
RESPONDENTS CASE (OVERVIEW)
The respondent agrees that it contracted with the applicant to fix the items identified in the Sergon report, and that the respondent quoted in respect of those items. The respondent agrees that it entered into the Building Contract with the applicant.
The respondent says that it was a term of the Building Contract that the respondent was entitled to issue invoices every 14 days for 95% of the value of the works performed and to be paid within 14 days thereafter.
Up until late October 2008 the respondent submitted progress claims, the applicant approved them by signing them and then the claims were sent to the insurer for payment to the respondent.
However, the applicant held a meeting on 13 November 2008 at which the respondent was present. As a result the respondent was directed to render invoices to a company called BCS which was the strata title manager of the applicant. An invoice dated 17 November 2008 was issued by the respondent and rendered to BCS. That invoice was progress claim no 11, the respondent's invoice was numbered invoice 91 and was for $29,390.00. By 3 December 2008 that invoice was still unpaid. On the same day the respondent issued a Notice to Suspend under the Building Contract.
Both parties then served a notice of dispute on each other, which was a step required under the Building Contract. It was a contractual requirement for the parties to then meet and conciliate. No meetings took place. Rather the applicant issued an invoice addressed to the respondent for approximately $200,000.00 which included the cost of alleged rectification works. The respondent rendered further invoices for further costs in December 2008. The applicant lodged a complaint with the Department of Fair Trading and subsequently withdrew that complaint.
In April 2009 the respondent commenced proceedings in this Tribunal seeking payment of outstanding invoices. The proceedings bear file number HB 09/18897. Also the applicant commenced these proceedings.
In the respondent's proceedings (HB 09/18897) ("the respondents proceedings") the respondent contended that the contract had been terminated and the applicant agreed. On 16 November 2011 the respondent's proceedings were settled on the basis that a sum of money (approximately $59,000.00) was to be paid by the applicant to the respondent plus costs with payment being deferred pending the outcome of these proceedings.
The respondent contends that it properly suspended the works and did not repudiate the Building Contract. The respondent also contends that both parties abandoned the Building Contract by early 2009. The respondent says that if it is decided that the respondent repudiated the Building Contract there was no acceptance of the repudiation by the applicant.
The respondent contends that the applicant is not entitled to the additional costs incurred by the applicant with Dankav on the basis that the applicant having abandoned the Building Contract, cannot then claim for the loss of the bargain they had made under the Building Contract.
The respondent says that the applicant engaged an expert, Mr Oke of Northern Rivers Building Consulting Services Pty Ltd in early 2009. The respondent engaged an expert, a Mr Anderson. Mr Anderson and Mr Oke produced reports and a conclave took place in April 2010 supervised by Tribunal Member Dr Briggs. The respondent contends that Dr Briggs conclave report points to difficulties in identifying which defects were caused by the respondent as opposed to defects which the respondent was engaged to fix and which predated the Building Contract.
The respondent points to subsequent expert reports (which will be identified in these reasons) and contends that they demonstrate that the experts cannot tell whether an item required to be rectified by the Building Contract was rectified but defectively or was not rectified by the respondent. The most recent conclave took place in June 2013 and a report was issued by Dr Briggs on 22 August 2013. The respondent contends that this report records the agreement of each side's experts that it is not possible to identify defects caused by the respondent.
APPLICANTS REPLY (OVERVIEW)
The applicant contends that the conclave report of 22 August 2013 does not record the position agreed by the two experts. The applicant also contends that if the Building Contract was abandoned, all that was abandoned was the future performance of the primary contractual obligations but that the secondary right to seek damages was not abandoned.
JURISDICTION
The parties do not dispute that the Tribunal has jurisdiction to hear and determine this claim. Jurisdiction arises by virtue of the provisions of the Home Building Act 1989 (as amended) and the Home Building Regulation 2004 (as amended). However, the Tribunals jurisdiction is limited to hearing building claims which do not exceed $500,000.00. The applicant has limited its claim to that amount.
APPLICANT'S EVIDENCE
I will describe the evidence in the approximate order it was presented at the hearing. This means that evidence concerning the alleged defective and incomplete works will be described first and later the evidence describing the chronological developments. All witnesses gave sworn evidence.
Mr McKenzie
The applicant tendered a folder of documents marked Exhibit C which was accepted subject to objection. The applicant tendered the affidavit of Glenn McKenzie (commencing on page 394 of Exhibit C). Mr McKenzie was an employee of Dankav and gave evidence concerning the work conducted by Dankav, which commenced in May 2011. However, he was unable to say whether the work undertaken by Dankav constituted work which was defective because the respondent had undertaken such work defectively or whether the work was defective because of the activities of the first builder (Titwall). He also acknowledged that Dankav were engaged to undertake some work which he understood not to be included in the work agreed by the respondent under the Building Contract. However, he said he did not know what the scope of works required of the respondent was. He referred to the fact that Dankav constructed a firewall and that it had straightened a facade which had previously been a curved facade. He also said that in waterproofing the courtyard a "Wolfin" membrane was used. However his evidence did not throw any light on the question of whether and to what extent the work of the respondent was defective or incomplete.
The Evidence of the Experts
The applicant led evidence from an expert which the applicant had engaged namely a Mr Paul Taber of Jeffrey Hills & Associates Pty Ltd. His evidence was given concurrently with the evidence of an expert engaged by the respondent namely Stephan Iskowicz of Axiom Construction Consultants Pty Ltd. Both were required to give evidence on two documents which formed part of Exhibit 7. Exhibit 7 comprises the report of the conclave convenor Dr Phillip Briggs dated 22 August 2013, a memorandum of the conclave conducted at Sydney on 5 June 2013 together with a Scott Schedule comprising 10 pages. Exhibit 7 was collectively described as the third conclave report. A second conclave had occurred in 2012. The memorandum and the Scott Schedule comprising Exhibit 7 had been signed by both experts.
The Scott Schedule contained 6 columns beside each item number (column 1), a column headed "Description" (column 2), and a column headed "Comment" (column 3). The fourth column was headed "Inconclusive" and beside a number of items there was a monetary figure. The total of these figures was $115,231.80. The fifth column was headed "Incomplete" and again there was a monetary figure (only beside items 6, 8, 9 and 10), and the total of these monetary figures was $1,075.00. The sixth column was headed "Defective". No monetary figures were recorded in column 6.
Mr Taber gave evidence that he was responsible for the inclusion of the figures in the Inconclusive column totalling $115,123.80. His evidence was that those figures were not a joint estimate of himself and Mr Iskowicz but rather his estimate calculated since the third conclave occurred in June 2013 of the cost of undertaking the work to which the items referred.
Mr Taber was also asked that about wording which appeared in the Scott Schedule under the heading "Comment" beside a number of items (e.g. item 12) namely these words:
"The Experts agree that the scope of work undertaken has not been adequately specified, documented or detailed in a manner that would enable the experts to provide an assessment of the scope of work undertaken or the cost that has been claimed".
Mr Taber gave evidence to the effect that he no longer agreed with the words quoted above. He said he had been "rushing" in signing off on the Scott Schedule and that he had reassessed his position. He said he had undertaken some calculations and was of the view that there was enough information to cost some of the items. These costs appear in the column heading "Inconclusive". On the other hand Mr Iskowicz gave evidence that he continued to agree with the wording quoted above and he did not support the figures in the "Inconclusive" column. For reasons mentioned later I generally prefer the evidence of Mr Iskowicz over that of Mr Taber.
The two experts were then taken to each of the items in the Scott Schedule. The effect of their evidence is set out in the following paragraphs.
Items 6, 8, 9 and 10.
The experts agree that in respect of items 6, 8, 9 and 10 the respondent had not completed the works identified and therefore ought to pay to the applicant the sum of those items namely $1,075.00.
Item 11
Both experts agree that no adjustment between the parties is required in respect of this item.
Item 12
Mr Iskowicz maintained the view expressed in the Comment column (quoted above). On the other hand, Mr Taber stated that he no longer regarded the item as inconclusive. Rather his opinion expressed at the hearing was that the work to be done, namely largely painting, was required to have been undertaken by the respondent and that, in his view, an allowance of $500.00 should be made in favour of the applicant. He said that the sum of $500.00 was an estimate on his part.
Mr Taber said he relied on the observations of a Mr Oke (about whom more will be said later) to the effect that painting needed to be done. As Mr Oke's evidence was not led by the applicant there is an insufficient basis for finding against the respondent.
Item 13
Mr Taber's evidence was that the respondent's work identified by item 13 was not completed and that the respondent should make an allowance in favour of the applicant in sum of $733.00 being the estimate made by Mr Taber to complete the work. Mr Iskowicz maintained the view expressed in the conclave report that this item was inconclusive and that the scope of work undertaken has not been adequately specified, documented or detailed in a manner to enable the experts to provide an assessment of the scope of work undertaken or the costs that have been claimed.
I am of the view that the applicant has not discharged its onus of proof on the balances of probabilities in establishing that the allowance claimed is justified.
Item 15
Mr Taber gave evidence that this item partly concerns a fascia board which the respondent constructed contrary to the contract requirements. Mr Taber said that his estimate was that it would cost $4,407.80 for the fascia board to be constructed in accordance with the contract requirements. The source of the applicant's assertion that item 15 constituted work not completed by the respondent is the report of Mr Oke. Mr Iskowicz gave evidence to the effect that in his opinion he could not rely on Mr Oke's report that the work was incomplete because Mr Oke in turn had simply reported on information conveyed to him by representatives of the applicant. Mr Taber took the view that the work was defective rather than incomplete because the respondent had undertaken work contrary to the scope identified in the Sergon report. Mr Iskowicz on the other hand stated in his opinion the work was not defective because the respondent did not do the work and did not charge for the work. To the extent that item 15 concerns the fascia board, the evidence of both experts is that the work was not done by the respondent in the manner contracted for and the respondent did not charge for the contracted work. The applicant did not adduce evidence as to whether it had suffered any loss as a consequence of the respondent's decision.
In addition, there is evidence that the work actually undertaken by the respondent was approved by Mr Fillery for the applicant: see the summary of Mr Platts evidence discussed later. Accordingly in my view the applicant has failed with respect to this claim.
The balance of item 15 concerned an allegation that tiling had not been completed in accordance with the scope of works. Mr Taber gave evidence to the effect that tiling which was undertaken by the respondent was undertaken in relation to only some parts of the affected area which, in his opinion, means that the integrity of the tiling is open to question. On the other hand Mr Iskowicz took the view there is no evidence of any defects as a consequence of the respondent's work, that the respondent had not charged for any additional tiling and that there is insufficient evidence requiring an allowance to be made by the respondent in favour of the applicant. Mr Iskowicz took the view that what the respondent did was reasonable in the circumstances. Mr Taber agreed that there is no evidence the tiling undertaken by the respondent was defective.
I am of the view that the applicant has failed to discharge its onus of proving on the balance of probabilities that the tiling work with respect to item 15 was defective.
Item 19
Like item 15, item 19 also concerns an allegation of defective tiling and issues concerning the façade. Mr Taber's evidence was that the respondent should make an allowance in favour of the applicant in the sum of $9,241.00 constituting Mr Taber's estimate of the cost of remedying defective tiling and the fascia. His calculations applied approximately $5,400.00 to the fascia and $3,700.00 to the tiling. Mr Taber's concern arises from the report of Mr Oke which was included in Exhibit C (being the applicant's bundle of documents) - in particular paragraph 64 page 36. There Mr Oke recorded issues concerning drainage of excess water as reported to him by a unit owner. Mr Taber's opinion relied upon Mr Oke but Mr Taber was not sure whether the problem was caused by the work of the respondent. Mr Iskowicz maintained the view that the evidence was too inconclusive to attribute any blame to the respondent.
I am of the view that the evidence of Mr Iskowicz is to be preferred and that the evidence remains sufficiently inconclusive to enable me to draw the conclusion that the applicant has satisfied the onus of proof that there was any defect in the work of the respondent.
I also find that the claim in respect of the fascia fails for the reasons given with respect to item 15.
Items 21, 22, 25, 25F and 25G
Item 21 concerned an assertion that the respondent had not carried out work in accordance with the Sergon report in respect of the removal and replacement of a fascia. Mr Taber's evidence was that the work undertaken by the respondent was not in conformity with the Sergon report but Mr Taber said he could not say that that work was defective. He said that if the work was to be undertaken in conformity with the Sergon report it would cost a figure he estimated to be $8,896.00.
Mr Iskowicz's evidence was that the façade of the building was curved when the respondent was required to replace the fascia but that when the subsequent builder (Dankav) did its work the curve was straightened out. In other words, Dankav's work was different from the work required of the respondent and the fascias were completely replaced. Mr Iskowicz gave evidence that the work undertaken by the respondent, although not in conformity with its contractual requirements, was necessary because the work affected the parts of the building immediately abutting this area.
In my view the applicant has not established that the respondents work was defective. There was no evidence that the Dankav work was occasioned or caused by the work of the respondent. In addition to the extent the respondent carried out a lesser or different scope of work the claim fails for the same reasons as identified for item 15. Accordingly in my view the applicant is not entitled to an allowance for this item.
Item 22 concerns the same issues as item 21. The amount estimated by Mr Taber as the cost to undertake the work required of the respondent is $5,271.00. He confirmed that he no longer stands by his comments made in the third conclave report to the effect that the scope of work undertaken has not been adequately specified in a manner that would enable the experts to provide an assessment of the cost.
Item 25 concerns the same issues as item 21 and 22 and the amount estimated by Mr Taber is $9,000.50.
Item 25F concerns the same issues as items 21, 22 and 25 and Mr Taber's estimate is $6,512.00.
Item 25G concerns the same issues as item 21, 22, 25 and 25F and the amount estimated by Mr Taber is $10,188.00.
Mr Iskowicz's view in respect of items 22, 25, 25F and 25G is the same as for item 21.
For the reasons given with respect to item 21, I am of the opinion that in respect of items 22, 25, 25F and 25G the applicant has failed to discharge the onus of proof in establishing that the respondent's work was defective or that the applicant has suffered loss as a consequence of the respondent's work. I also find that the work was undertaken with the applicants approval.
Item 65
Item 65 concerns a complaint regarding the common area courtyard and again the comment quoted earlier (see paragraph 28 of these reasons) in the third conclave report applies to this item. However, Mr Taber takes the view that a sum of money, which he estimates is $26,300.00, should be recovered by the applicant from the respondent.
Mr Taber's evidence was that the respondent was required to grind down pebble crete, then lay a waterproof membrane and also seal certain control joints.
Mr Iskowicz gave evidence that the work later undertaken by Dankav was of a different nature from the work required of the respondent. Mr Iskowicz said that Dankav had installed a Wolfin membrane which was a membrane of a better quality to that which the respondent was to install. Mr Iskowicz's evidence was that respondent's work in respect of item 65 was not complete by the time the respondent's work came to an end.
The respondent did not complete the work because it was waiting a decision as to whether the applicant agreed to the expenditure for a polyurethane base to be obtained from a company called Multiblast which had issued a quote on 1 December 2008. Mr Taber's view was that the respondent had quoted $26,300.00 to undertake the work identified by Item 65 but had not done such work.
Mr Iskowicz maintained the view expressed in the third conclave report namely that there was inadequate evidence to enable the experts to provide an assessment.
Mr Iskowicz was asked whether the work undertaken by the respondent was defective. He said that there was no evidence that the respondents work was defective.
I am of the view that the work identified by item 65 was not completed by the respondent but that for the reasons given by Mr Mr Iskowicz there is insufficient evidence to justify a conclusion that the applicant should recover the sum of money estimated by Mr Taber.
Item 66
This item is not pressed by either the applicant or the respondent.
Item 71
This item concerns an amount of $1,560.00 which the respondent quoted to fill joints and waterproof, and render certain walls in the building. Mr Taber was of the view that the work had not been properly completed and that the respondent ought to refund to the applicant 50% of the amount quoted (namely $780.00). However Mr Iskowicz took the view as recorded in the third conclave report that there was insufficient information to enable the experts to provide an assessment of the work to be done or the cost.
In respect of item 71 I am of the view that there is insufficient evidence adduced by the applicant to discharge the onus of proof.
Items 74 to 78 (inclusive)
These items concern work done to the roof of the building and also concern flashing to unit 9. The third conclave report recorded these items as inconclusive. However, Mr Taber gave evidence that on the assumption that the work had been undertaken defectively then, in his view, an amount of money ought to be returned by the respondent to the applicant. He assessed that amount at $4,632.00. Mr Iskowicz, on the other hand, gave evidence that he could not quantify an amount which ought to be paid by the respondent. His evidence was that the roof had changed after the Building Contract had come to an end and that Dankav had undertaken different work to the roof from that which the respondent had contracted to undertake. In addition Mr Iskowicz gave evidence that in his view there was no evidence that the respondents work had been defective.
In my view there is insufficient evidence to conclude that the applicant has discharged its onus of proof in establishing that it is entitled to an allowance from the respondent.
Item 6.1
Item 6.1 has also been identified in the third conclave report as an inconclusive item. However, Mr Taber has included in the inconclusive column the sum of $29,741.00.
Mr Taber's evidence was that the work identified by item 6.1 had been claimed for and paid for by the respondent but it appeared that it had not been done. He based this view on comments made by Mr Oke in his report of 4 August 2009.
I do not think it is necessary to consider whether Mr Tabers estimate is reasonable because I prefer the evidence of Mr Iskowicz which is to the effect that the evidence is inconclusive as to whether the work of the respondent left ongoing water leaks or was otherwise defective. However, Mr Iskowicz did acknowledge that some work was not done and that he estimated the cost to do that work could be in the order of $6,000.00. Given this evidence I am of the view that the respondent should pay to the applicant $6,000.00 for item 6.1.
Conclusions in respect of all items 6 to 6.1 mentioned above.
The result of the third conclave report is, according to Mr Iskowicz, that there is inconclusive evidence to propose any allowance being made by the respondent in favour of the applicant other than the sum of $1,075.00 in respect of items 6, 8, 9 and 10 and $6,000.00 for item 6.1. Mr Tabers evidence is that the sum of the items mentioned in his evidence and listed in the inconclusive column of the third conclave report is an amount which in his opinion represents an allowance which should be made by the respondent in favour of the applicant. That totals $116,406.80.
Mr Taber was asked questions concerning the second conclave report. That document is in Exhibit 8 commencing on page 578 and signed by Mr Taber and Mr Iskowicz. That report contains these words beside items 12, 13, 15, 19, 21, 22, 25, 25F, 25G, 65, 71, 78 and 6.1:
"The Expert's agree that this work has not been specified, documented, measured or quantified in a manner that would allow a proper assessment at this point".
The view expressed in the words quoted was in substance repeated in the Scott Schedule forming part of the third conclave report. However, Mr Taber's evidence was that he was of the opinion that despite such words as those quoted he has since been able to assess the cost of rectifying or completing the works.
I do not have confidence in Mr Tabers evidence. In the main it relies upon comments concerning defects made by Mr Oke in his reports and, for reasons which will appear later in this decision, that report is not in evidence. Secondly, Mr Taber agreed both in the 2012 conclave report and in the third conclave report with Mr Iskowicz that the evidence was inconclusive. However, Mr Tabers modification of that position in the witness box gave me no confidence in the views which he expressed and I generally prefer the evidence of Mr Iskowicz. Accordingly, the only allowance which ought to be made by the respondent in favour of the applicant is the sum of $1,075.00 (for items 6, 8, 9 and 10) and $6,000.00 for item 6.1.
Mr Fillery's evidence
Mr Fillery's evidence in chief consisted of an affidavit dated 4 August 2009 (commencing at page 58 of Exhibit C), an affidavit dated 27 August 2009 (commencing at page 223 of Exhibit C) and a statement dated 14 November 2009 (commencing at page 316 of Exhibit C). Mr Fillery was the secretary of the applicant and a member of the executive committee of the applicant.
Mr Fillery's evidence was that a number of progress claims were submitted by the respondent to the applicant, after which they were approved for payment by the applicant and handed back to the respondent. Mr Fillery was the person who approved the claims. He assumes that after he returned the claims to the respondent they were then passed on to the applicant's insurer by the respondent and the applicants insurer effected payment.
A meeting occurred on Thursday 13 November 2008. Mr Fillery and other members representing the applicant were present. Mr Leon Platt, his son and his sister, Coralie Roberts were present on behalf of the respondent. Mr Fillery gave evidence that at that meeting he said that he would not deal with Mr Platt any further and that, in particular, progress claims should thereafter be submitted by the respondent to the applicants strata manager, a company known as BCS.
On Monday 17 November 2008 Mr Platt submitted an invoice to Miss Natalie Bates of BCS for payment. Miss Bates contacted Mr Fillery to seek his instructions as to what should be done with the invoice and he told her to leave it until next Monday. I presume that that means Monday 24 November 2008.
On 18 November 2008 BCS wrote to the respondent (see page 249 of Exhibit D) identifying aspects of the respondents work needing rectification. The respondent replied by a letter dated 22 November 2008 (see page 251 of Exhibit D). The essential message in that letter was that the respondent awaited the applicant's instructions and the insurers instructions in relation to a number of matters.
On 3 December 2008 the respondent issued a letter addressed to the applicant purporting to suspend the contract works (see Exhibit C page 211 and Exhibit D page 257). The expressed basis for the suspension was that invoice 91 that was delivered on Monday 17 November 2008 to BCS remained unpaid. Mr Fillery said he could not remember seeing this letter of 3 December 2008 but he said that he was aware of it. Mr Fillery gave evidence that the Owners Corporation decided not to approve the invoice for payment because it regarded the respondent as being in credit by virtue of the deposit which had been paid previously.
Mr Fillery sent an email dated 8 December 2008 (page 261 of Exhibit D) to Mr Aris Zerbas who was an employee of the applicant's insurer. In that email Mr Fillery reported on the meeting which had occurred on Monday 13 November 2008 and he also said that from 17 November 2008 the respondent had left the job and was nowhere to be seen. In cross examination, Mr Fillery maintained the assertion that the respondents personnel (being predominately Mr Platt) did not return to the site to do any work after 17 November 2008.
Prior to November 2008 Mr Fillery appears to have been very happy with the respondents work. He said as much in an email dated 30 October 2008 (see Exhibit D page 235). After that the respondent sent to Mr Fillery a job projection plan: see email from Coralie Roberts dated 4 November 2008 - Exhibit D page 240. That plan (which is page 242 of Exhibit D) sets out a program for work to be undertaken for October, November and December 2008 and then for further work from 29 January 2009. The program identified that work would not be undertaken between 24 December 2008 and 29 January 2009. I note that evidence given by Mr Platt in the respondents case throws doubt on whether page 242 of Exhibit D is the respondent's document or a document which incorporated changes made by Mr Fillery.
As stated, Mr Fillery gave evidence that until 30 October he was happy with the respondents work, but then it rained in early November and the building was full of water.
Turning back to Mr Fillery's email of 8 December 2008 to Mr Zerbas, Mr Fillery described a number of complaints he had with the respondent. He described Mr Platt and his family members as extremely dishonest and that they had failed to confirm anything in writing and failed to attend meetings. His email concluded by saying that the respondent walked off the job on 17 November, had refused to discuss or solve any problems and since the respondent has been paid every invoice to that point inside the timeframes, the respondent had breached their contract by walking off the job. I found Mr Fillery to be a witness given to hyperbole and he was on occasions evasive in some of his answers during cross examination.
A further meeting occurred on or about 9 December 2008 between representatives of the applicant (including Mr Fillery) and of the respondent (including Mr Leon Platt). At that meeting the applicant presented an invoice for $200,185.00. Mr Fillery gave evidence that at this time the Owners Corporation were fed up with Mr Platt and did not want anything more to do with him.
A copy of the invoice for $200,185.00 appears on page 267 of Exhibit D. It is dated 9 December 2008 and is made up of approximately 8 items. The first item seeks the return of the deposit ($6,500.00) and the second the return of an amount also described as the deposit for $33,721.00. Item 3 is a charge for storage. Item 4 is a charge for the use of security keys. Item 5 is in respect of work paid for by the applicant but alleged to be "not correct or finished". Item 6 is described as "resurface and do ground and level 1". Item 7 is described as facia curved from top units 13, 14, 8. Item 8 is described as stairs repairs and access plus scaffolding.
On 15 December 2008 the respondent issued to the applicant a document headed "Notice of Dispute under Clause 26 of the Building Contract". It referred to the applicant's failure to pay progress claim number 11 being invoice 91 dated 13 November 2008. By letter dated 19 December 2008 the applicants solicitors (Stacks) wrote to the respondent and invoked the dispute resolution process outlined in clause 26 of the Building Contract. The letter referred to the requirement for the parties to confer.
Mr Fillery complained about the respondent to the Department of Fair Trading and a meeting occurred on 9 February 2009 between Mr Fillery, Mr Platt and a Departmental inspector. Mr Fillerys evidence was that he was very angry and told Mr Platt at the meeting that he should not come back to the job.
In Mr Fillery's affidavit dated 4 August 2009 he quotes a statement made by Mr Platt at the meeting with the departmental inspector in February 2009 to the effect that Mr Platt then said that the Owners Corporation were not happy for the building works to progress "as they feel we are not capable of doing the work that I quoted on". In cross examination Mr Fillery agreed that he said to the inspector in the presence of Mr Platt words to the effect that the Owners Corporation did not want Mr Platt on the site and that he should not come back.
Mr Fillery said he was aware of the fact that the applicant had instructed a firm of solicitors, Stacks and that Stacks had written to the respondent's solicitor by letter dated 30 March 2009 (see page 322 of Exhibit D). That letter purported to invoke the dispute resolution provisions in the Building Contract. The letter also referred to an invoice issued by the applicant addressed to the respondent. The letter stated that the applicant reserved the right to take action against the respondent for a refund of monies identified in the invoice.
Mr Oke's evidence
The applicants sought to adduce evidence of a Mr Oke of Northern Rivers Building Consultant Services Pty Ltd and the respondent objected to such evidence. There were a number of reports of Mr Oke. They were dated 6 February 2009, 1 May 2009, 4 August 2009, 28 August 2009 and 20 October 2009. The applicant had initially briefed Mr Oke and the respondent had initially briefed a Mr Ian Anderson. Both experts attended an expert's conclave conducted by a Tribunal member onsite on 28 April 2010 and a memorandum of that conclave was produced. However, subsequently the applicant briefed a new building expert namely Mr Jeffrey Hills (with whom Mr Taber is associated) and the respondent briefed Mr Stephan Iskowicz of Axiom Construction Consultants Pty Ltd. Mr Taber and Mr Iskowicz were the experts engaged in the two subsequent conclaves namely the 2012 conclave and the third conclave. The respondent objected to the tender of the reports of Mr Oke upon the basis that the 2012 conclave and the third conclave effectively superseded the first conclave and the reports of the experts then engaged namely Mr Oke and Mr Anderson. Significant progress had been made between the first and the third conclaves in the sense that the number of items in contention between the parties had substantially reduced. The respondent submitted that if the applicant is allowed to revert to the use of the Oke reports at the hearing then the work conducted to achieve the 2012 conclave report and the third conclave report would prove to be a waste of time and resources. On the other hand, the applicant sought to adduce the Oke reports for all purposes.
I ruled at the hearing that the submissions of the respondent in respect of the Oke reports should substantially be upheld. My reasoning was that the purpose of the 2012 conclave and the most recent conclave (producing the third conclave report) were intended by the orders of the Tribunal to not only produce agreement between experts in respect of as many items as possible but also to identify in respect of items remaining in contention the points of difference and the reasons of the experts. To allow Mr Okes reports to be adduced would in my view subvert the work in the subsequent conclaves and would constitute a waste of the time and resources which were put into the production of the 2012 conclave report and the third conclave report. I therefore refused to allow Mr Oke's reports to be adduced except to the extent that Mr Oke reported on factual observations which he made as a result of his own site inspections. The applicant did not call Mr Oke as a witness.
The applicant also claimed the refund of the deposit of $6,500.00 paid by the applicant to the respondent and the balance of the deposit in the sum of $33,721.00 paid by the applicant to the respondent. The respondent characterised this claim as a late amendment by the applicant but did not point to evidentiary prejudice which it would suffer if the claims were allowed. The respondent submitted that the applicant and respondent had settled the respondents claim brought against the applicant in CTTT proceedings HB 09/18897 on terms evidenced by Terms of Settlement dated 16 November 2011. That document was tendered and became Exhibit 5. The respondent foreshadowed making submissions to the effect that the applicant was estopped from pursuing these two claims. I allowed the applicant to amend its claim to incorporate a claim for the refund of those two amounts. In its post hearing submissions the respondent states that it consents to an order that these two amounts be paid to the applicant.
The applicant handed up a Statement of Facts and Contentions which had been filed and served on about 10 May 2013 and which identified that the applicant claimed the sum of $1,525,983.00 plus GST by reason of the respondents breach of the Building Contract. That sum represented the cost to complete the incomplete works and to rectify defects. From that sum an allowance is to be made for monies owing under the Building Contract. The applicant claims, in the alternative, the cost of rectification of defects caused by the respondent's breach of statutory warranties. The applicant claimed an amount estimated to be $261,175.00 by Mr Taber. Mr Taber gave evidence that the report of Jeffery Hills and Associates dated 16 December 2011 (exhibit C, page 473) was in fact his report in that he was the author of the report notwithstanding the report was signed by Mr Hills and not by Mr Taber. In his evidence Mr Taber was asked what assumption had he made about whether the work done by the respondent was defective. He replied that he had assumed that there were serious problems on the site. I find that in preparing the report Mr Taber accepted as a fact the assumption made in the letter of instructions from the applicants solicitor, Vardanega Roberts that the respondent failed to complete and / or satisfactorily complete the work (see paragraph 2.6 on page 488 Exhibit C).
THE RESPONDENTS EVIDENCE
The respondent tendered the report of Mr Stephan Iskowicz dated 18 September 2012 (see page 233 of Exhibit 8). Mr Iskowicz's report stated that he had conducted an audit of invoices issued by the respondent. One conclusion he drew was that work not carried out by the respondent was not invoiced by the respondent. However, in his oral evidence he acknowledged that in respect of item 6.1 the work was not done by the respondent and that no credit had been provided. He estimated that the cost of completing this work at $6,000.00.
Mr Iskowicz confirmed the conclusion he had reached in his report namely that he was not in a position to provide a detailed analysis of the costs claimed in the Scott Schedule prepared by Mr Taber as Mr Taber had not provided a detailed method of costs assessment (see page 265 of Exhibit 8).
Mr Platts evidence
Mr Leon Platt gave evidence. His evidence in chief consisted of an affidavit dated 4 August 2009 (Exhibit 8 commencing page 45), and an affidavit dated 31 August 2009 (Exhibit 8 commencing page 142). Mr Platt is a Director of the respondent and stated he had responsibility for its affairs. His first affidavit described work undertaken at the site from 17 November 2008 and that he was awaiting instructions from the applicant before being able to undertake other work.
In cross examination Mr Platt acknowledged the respondent did work in respect of item 15 which was different from the work the respondent quoted to provide. He made the same concessions in respect of items 19, 21, 22, 25, 25F and 25G. He conceded that there were no agreed variations in writing in respect of those items. He said that in some cases the respondent undertook less work than that agreed to be undertaken and in other cases more work or varied work. He said he decided what changes in the work were needed and that Mr Fillery agreed with him. Mr Platt described the situation as one of "give and take".
Mr Platt was taken to a letter dated 7 May 2008 (see page 108 of Exhibit D) and to a letter dated 1 July 2008 (which is at page 92 of Exhibit 8) issued by the respondents insurer (Vero) both of which stated the insurers contribution "would normally be paid within 30 days after we have received both the owners written authorisation and your tax invoice". Mr Platt acknowledged that he was aware from those letters that the respondent would be paid within 30 days.
Mr Platt was taken to Exhibit 8 page 10 being a page of the Building Contract. That page disclosed a method of payment identified as option B namely that payment was to be made at the rate of 95% of the value of the work performed at the date of the request for payment and that requests are to be made every 2 weeks. Mr Platt said he had circled option B in his copy of the Building Contract. Option B was not circled in the copy of the Building Contract in the applicants tender bundle (page 140 of Exhibit D) but Option A has been crossed out. Option C only applies if written terms are attached and none are. I find that the parties agreed to option B.
Mr Platt acknowledged that the respondent had received the excess of $6,500.00 and the balance of the deposit.
Mr Platt gave evidence that the invoices rendered were for 100% of the value of the work performed, not 95%.
Mr Platt was taken to a number of emails to Mr Fillery sent by Coralie Roberts for the respondent. Mr Platt said he was aware of these emails. In essence these emails concerned issues which Mr Fillery was trying to resolve. They culminated in an agreement for Mr Platt to meet with representatives of the Owners Corporation on 13 November 2008. On 11 November 2008 Mr Platt sent a facsimile (Exhibit D page 246) to the Owners Corporation acknowledging that an invoice for $18,350.00 should have been for $8,350.00, which meant that the respondent had been paid $10,000.00 earlier than it was entitled.
At the meeting on 13 November 2008 between representatives of the applicant and representatives of the respondent, Mr Platt was requested that in the future all invoices issued by the respondent should be signed by Mr Platt. Mr Platts evidence was that he agreed at the meeting to do so.
Subsequently by letter dated 18 November 2008 (Exhibit 2), BCS on behalf of the applicant wrote to the respondent referring to invoice 91 which had been received by BCS on behalf of the applicant. BCS advised the respondent that, although the invoice had been signed by Mr Platt, the Owners Corporation of the applicant requested words be added to the invoice by which Mr Platt certified that the invoice is a "true and correct amount charged for work done" by the respondent. Mr Platt was shown an email dated 4 December 2008 from Coralie Roberts on behalf of the respondent (exhibit F) in which Miss Roberts said that although the respondent had no legal obligation to do so, it would amend the invoice as requested and issue an amended invoice signed by Mr Platt. Mr Platt was shown an email from himself to BCS dated 4 December 2008 (Exhibit G) by which he sent the signed amended invoice to BCS. Amended invoice 91 (see exhibit D page 260) is dated 13 November 2008 with Mr Platt's signature and certification included. Beside Mr Platt's signature is the date 4 December 2008 which is the date he signed the amended invoice. On 19 December 2008 Mr Platt wrote to Vero reporting on this development (see exhibit D page 287). His letter confirmed that the respondent had suspended work on 3 December 2008. His letter stated that on 17 November 2008 "progress claim 11, tax invoice number 91" was given to BCS and that it fell for payment on 3 December 2008.
FINDINGS
The most critical issue in these proceedings is to determine how the Building Contract came to an end. The applicant contends that the respondent left the site, ceased work and in doing so breached and repudiated the Building Contract. On the other hand the respondent contends that it properly suspended the works and that both parties abandoned the Building Contract in early 2009.
One of the difficulties with assessing the conduct of the parties is that the terms of the Building Contract do not appear to have been complied with by either side. For example, the respondent rendered invoices for amounts which were not in conformity with the Building Contract in that the amounts invoiced were not for 95% of the value of the work but, nevertheless, Mr Fillery approved invoices and they were paid. Secondly, the respondent undertook work which was not in conformity with the contract, nor the subject of agreed variations in writing, although Mr Platt said that he had Mr Fillerys oral agreement to variations. An examination of the events from November 2008 is necessary to determine the position as to how the Building Contract came to an end.
At the meeting on 13 November 2008 at which representatives of both the applicant and the respondent were present it was agreed that Mr Platt must sign all future invoices. On 17 November 2008, the respondent submitted invoice number 91 to BCS for $29,390 in respect of items 15, 22 and 6. Some time was devoted at the hearing to the question of whether that invoice was signed. Exhibit 2 suggests that it was. That is a letter from BCS to the respondent dated 18 November 2008 which acknowledges it was signed and then goes on to request that Mr Platt certify that the invoice is true and correct. However, Mr Platt's evidence in cross examination suggested it was not signed as he said, when speaking of signing invoice 91 on 4 December 2008 that other invoices were not signed. I am of the view that Mr Platt was referring to invoices other than invoice 91 and that he did not agree that invoice 91 was not signed when it was delivered on 17 November 2008.
BCS sent a second letter to the respondent on 18 November (Exhibit D page 249) identifying work requiring rectification. The respondent replied by letter dated 22 November (Exhibit D page 251). That letter addressed the applicant's suggestion that there had been a reduction in staff on site. The respondent's letter relevantly stated that the respondent awaited approval from the applicant and its insurer before progressing with some of the work.
On 3 December 2008 the respondent issued the letter suspending the contract works as described earlier. Before dealing with this development in some detail it is necessary to deal with the applicant's assertion that the respondent effectively ceased all work from 17 November 2008. I find that the respondent did not walk off the job as alleged from 17 November 2008. There is ample evidence from Mr Platt demonstrating that work continued: see Exhibit 8 page 49 and 52, Exhibit D page 251. This includes pouring a concrete slab and work to temporary stairs. The evidence to the contrary comes from the records of the applicant but in my view they reflect a tendency for the applicant to exaggerate. Indeed the letter from BCS dated 18 November 2008 (Exhibit D page 249) reflects in my view a more accurate description of the respondents activities in that it refers to a reduction in staff. The respondent replied by letter dated 22 November 2008 (Exhibit D page 251) describing the work recently undertaken.
In my view the notice suspending the contract works issued by the respondent on 3 December 2008 was a valid notice under the Building Contract. Invoice 91 was not for 95% of the value of the work but was in fact for 100% of the value of the work. However, the respondent and the applicant had respectively issued and approved a number of prior invoices for 100% of the value of works and in my view each had by their conduct accepted that practice as constituting the contractual arrangement between them.
The applicant also contends that invoice 91 was not payable because it included claims for items 15 and 22 which had been the subject of unapproved variations and, in the case of item 22, the work which was performed was less than the contractual scope. As against this Mr Platt's evidence was that variations were agreed orally with Mr Fillery. His evidence was also to the effect that the nature of the work required "give and take."
In my view, invoice 91 was a request for a progress claim imposing on the applicant on obligation to pay but without prejudice to the applicants' right to argue later that some adjustment in amounts due between the parties should be made. The Building Contract describes progress payments as "on account."
As at 3 December 2008 invoice 91 was overdue by in excess of 14 days. The applicant contends that progress payments were to be paid within 30 days after the day of receipt by Vero of the applicant's authorisation and the respondents invoice. I am satisfied that Mr Platt was aware of this correspondence from Vero but it is my view that Vero's representation that it would "normally" pay within 30 days was not a term incorporated into the Building Contract. Notwithstanding Vero's representations, the applicant continued to be liable under the Building Contract to pay the respondent within 14 days. The language of Vero's letters is consistent with Vero representing the ordinary practice as to payment rather than an intention that the letter be a term of the Building Contract.
The applicant also concludes that the Notice of Suspension of Works was invalid because Invoice 91 was not certified until 4 December 2008. It is my view that the parties had not agreed at their meeting of 13 November 2008 that invoices needed to be certified. The only agreement at that meeting was that Mr Platt would sign invoices and I have formed that invoice 91 was signed. The request for certification came subsequently and, although, the respondent did issue a certified version of invoice 91 on 4 December 2008 the fact remains, in my view, that the version of invoice 91 issued on 17 November was due for payment on or prior to 2 December 2008.
The respondent's notice of suspension of work was served pursuant to clause 21 of the Building Contract. That clause permitted the respondent to suspend the works if the applicant failed to pay or cause to be paid any payment or any part thereof within the time required by item 5 of schedule 2, namely 14 days. An effect of the notice is to require the parties to meet pursuant to clause 26 of the Building Contract.
It is my view that the notice of suspension was not conduct which could be construed as repudiation by the respondent of the Building Contract. For conduct to be repudiatory of a contract the conduct must amount to an intimation of an intention to abandon and altogether to refuse performance of the contract,or conduct which evinces an intention no longer to be bound by the contract: Ryder v Frohlich [2004] NSWCA472. In my view the respondents conduct in issuing the notice of suspension of works does not satisfy these requirements.
Even if invoice 91 was excessive on the basis it was for an amount to which the respondent was not then entitled and that, as a consequence, the respondent was not entitled to suspend the work under clause 21 of the Building Contract, I do not think it follows that the respondents' conduct was repudiatory of the Building Contract. In such circumstances it may be said that the respondent has acted inconsistently with the terms of the Building Contract but that would, in the circumstances of this matter, not constitute conduct of a repudiatory nature because it would not constitute conduct of the kind described in Ryder v Frohlich.
The applicant also contends that the Notice of Suspension of Works was also invalid because it was based on invoice 91 in which the respondent claimed amounts for items 15 and 22 which were not the subject of an approved variation and item 22 was overstated as a lesser scope of works was performed compared with the contractual scope. I accept the evidence of Mr Platt that the nature of the scope of work was such as to require some variation of the contractual scope and that he sought and obtained the oral agreement of Mr Fillery to the variations. Similar issues arise with respect to item 22. A further contention of the applicant was that the invoices rendered by the respondent were based on a quotation issued by the respondent rather the price which found its way into the Building Contract. However, earlier invoices had been issued in accordance with that quotation (which the applicant has called the Third Platt Quotation) rather than in accordance with the Building Contract and such invoices had been approved by the applicant for payment.
I agree with the respondent's submission that the notice of suspension was not a document by which the respondent purported to terminate the contract. It was merely a notice to suspend works whilst the issue of non-payment was addressed by the parties. I accept the view put forward by the respondent that the notice of suspension was not an act which shows that the respondent intended no longer to be bound by the contract or that it would fulfil the contract only in a manner substantially inconsistent with the respondent's obligations.
Even if the respondent's suspension of the works was not justified or that its view that there was no work to be done is also not justified, it is not reasonable to conclude that the respondent repudiated the contract. As the High Court stated in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at paragraph 431:
"But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognise his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him".
Applying these statements and if one assumes that the notice suspending the works was not valid, it is still a notice served under the contract and cannot be construed in my view as evincing an intention to repudiate the contract.
There was a meeting on or about 9 December 2008 between the respondent and representatives of the applicant. At that meeting the invoice for $200,185.00 (exhibit D page 267) was presented to Mr Platt. I find that that invoice (which, amongst other things, called for the return of the excess and the deposit and a refund for work described as not correct or finished) constituted a clear indication by the applicant that it no longer wanted to maintain the Building Contract. It is my view also that by submitting that invoice the applicant exhibited no intention of paying invoice 91.
The respondent wrote to the applicant by letter dated 15 December 2008 suggesting a meeting (exhibit D page 275). The applicants' solicitor, Stacks wrote to the respondent by letter dated 19 December 2008 seeking to commence the dispute resolution process identified in Clause 26 of the Building Contract (exhibit D page 284). The letter proposed a dispute resolution meeting.
As stated, the applicants conduct in issuing an invoice for $200,185.00 was a clear indication that the applicant did not wish to maintain the contract. The applicant submits that it accepted the respondent's repudiation by its conduct in December 2008 including at the meeting on 9 December and by the delivery of the invoice for $200,185. However, the applicants' solicitor's letter of 19 December 2008 sought to commence the dispute resolution process pursuant to clause 26 of the Building Contract. As the respondent contends, reliance on clause 26 is inconsistent with an intention to accept a repudiation of the contract. This is so because clause 26 expressly prohibits termination prior to a meeting occurring between the parties to attempt to resolve their dispute.
As recorded earlier, the respondent wrote to Vero by letter dated 19 December 2008 (exhibit D page 287). In that letter the respondent stated that there was then no work for the respondent to do pending receipt of instructions from the applicant.
The next time that the parties met was on the 9 February 2009. As described earlier, at that meeting Mr Fillery made it clear that the applicant did not want to resolve the dispute in the manner envisaged by Clause 26 but instead wanted to bring the contractual relationship with the respondent to an end.
Despite what Mr Fillery said at the meeting on 9 February 2009 to the effect that he did not want Mr Platt back on site, the applicants' solicitors, Stacks wrote to the respondents' solicitors on 30 March 2009 (exhibit D page 322) again seeking to invoke the dispute resolution process and, in particular, clause 26 of the Building Contract which requires the parties to confer.
In my view, this letter is not consistent with the applicant accepting the alleged repudiation of the Building Contract by the respondent.
On or about 21 April 2009, the respondent commenced the respondents' proceedings in the Tribunal claiming payment of the sum of $55,068.61 and an order that the contract had been terminated.
In May 2009 the applicant brought these proceedings in the Tribunal. The application alleged defective work and that the respondent be required to do work or services to the approximate value of $170,000.00.
I find that the Building Contract did not come to an end by reason of repudiatory conduct of the respondent and that in any event the conduct of the applicant was not consistent with the applicant having accepted the alleged repudiatory conduct of the respondent. Acceptance of alleged repudiatory conduct must be unequivocal (Ryder v Frohlich paragraph 117-120) and I find that the applicants conduct was not unequivocal.
The applicant submits, in the alternative, that the conduct of the parties was such as to lead to the conclusion that the Building Contract was terminated by abandonment, that is to say, neither party intended the contract to be further performed. The respondent agrees with this submission. The applicants submission in this respect is set out below:
"Alternatively, the conduct of the parties was sufficient for the Building Contract to have been terminated by abandonment. In Ryder v Frohlic, the Court of Appeal explained abandonment as follows:
"[135] Where it is plain from the conduct of parties to a contract that neither intends that the contract should be further performed the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract: DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 434 (per Stephen, Mason and Jacobs JJ with whom Aickin J agreed); Summers v The Commonwealth [1918] HCA 33; (1918) 25CLR 144 at 151 - 152 per Isaacs J. The inference of abandonment will be drawn where "an inordinate length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them... What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long - continued ignoring of the contract on both sides that ... 'the matter is off altogether'": Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432 per Dixon CJ and Fullagar J.
[136] Whether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties: see CIC insurance Ltd v Bankstown Football Club Ltd (1995) 8 ANZ Ins Cas 61-232 per Kirby P; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279 at [2] per Ryan J, at [30] - [32] per Kiefel J; at [57] per Gyles J; Marminta Pty Ltd v French [2003] QCA 541 at [22] per Jerrard JA, Williams JA and Philippides J agreeing.
[137] The underlying premise of the abandonment cases is that a period of time elapses during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned. It is clear that the question whether an "inordinate length of time has been allowed to elapse" is relative. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd the High Court was prepared to infer abandonment after a period of less than five months had elapsed during which neither party took any steps to perform the contract. In Fitzgerald v Masters it was held that a contract for the sale of land had not been abandoned even though proceedings for its specific performance were not commenced until 26 years after its execution."
[see also Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248, at [73]]".
The concept of abandonment requires there to be an inordinate length of time elapsing during which neither party has attempted to perform, or called upon the other party to perform, the contract between them: see Ryder v Frohlich. Such a period of time has been described as relative and one to be considered in the context of the circumstances of a particular case. The relevant principles concerning abandonment and the prior authorities are helpfully discussed in Broulee Developments Pty Ltd v McKay [2008] NSWSC 32.
Looking at the facts objectively I conclude that the parties conduct between December 2008 and May 2009 manifested the intention of abandoning the contract such that by May 2009 both parties regarded the contract as at an end. By the end of this period both parties had failed to meet in accordance with the terms of the Building Contract, neither had terminated the contract in accordance with its terms and both had commenced separate proceedings in the Tribunal. The parties had been in dispute since late November 2008 and there had been no building activity by the respondent since either 17 November 2008 (as the applicant contends) or from 3 December 2008 (the respondents contention with which I agree). In the context of the circumstances, including that the building work program contemplated work not being done between 24 December 2008 and 29 January 2009, the period of building inactivity was long enough to conclude that by April or May 2009 the parties had mutually abandoned the contract.
The next issue to consider is what flows from the finding I have made that the Building Contract was abandoned.
The applicant's primary contention is that the respondent breached the Building Contract and as a consequence the applicant incurred the cost of completing the work with Dankav and further as a consequence the applicant is entitled to the cost, in excess of any amount of the contract price unpaid, of reasonable and necessary work to make it conform to the contract plus consequential losses by reason of the breach. The applicant has also made submissions as to the correct measure of damages to be applied in the case where the Tribunal's finding is that the contract has been abandoned. As these submissions are in reply to the respondents submissions I will deal with the respondent's submissions first.
The respondent submits that the consequence of a finding that the contract was abandoned is that the parties rights up until the time of abandonment are preserved but extinguished after the time of abandonment. The respondent submits that a party which has voluntarily abandoned a contract cannot seek damages for the loss of the bargain under the contract because that is tantamount to giving up the bargain and at the same time seeking damages for the loss of the bargain. According to the respondent for a party to claim more than nominal damages for breach of contract that party must prove readiness and willingness to perform all concurrent obligations and that if the contract has been abandoned then the applicant cannot have been willing to perform its obligations.
On the other hand the applicant contends that an objective analysis of each parties conduct reveals that what was abandoned was the future performance of the primary contractual obligations only and not the contract itself or any release of any rights including the secondary obligation to pay damages. The applicant states that all accrued rights continue to exist including an entitlement to damages for breach of the Building Contract.
The applicant further contends that what is abandoned is determined by an objective analysis of each party's conduct, and that the parties may abandon their contract ab initio or part of it, future performance or part or all of unperformed obligations.
The basis for the applicant's contention is that each party issued invoices for all of their respective claims, the issuing of Notices of Dispute, the respondents commencing the respondent's proceedings for outstanding monies and the applicant commencing the present proceedings for damages including for loss of bargain and for defects. The applicant argues that its submission in this respect is also supported by the principle that a building contract is an entire one and that it is improbable that the parties intended to abandon ab initio such a contract partly performed. The applicant refers to a decision of the Court of Appeal in Tan Hung Nguyen v Luxury Design Homes Pty Ltd [2004] NSWCA 178 for the proposition that as building contracts are entire contracts there is a presumption that abandonment is ab initio. In that case the Court of Appeal decided that the contract was not one where entire performance was a condition precedent to payment. The contract contemplated an entitlement on the builder's part to receive payment despite failure to substantially complete the works (see the judgment of Einstein J paragraph 76). The view was based upon a clause in that contract (clause 24) which is similar to clause 28 of the Building Contract. Clause 28 contemplates the possibility of the builder retaining some payments already received. Clause 28 provides that the owner may following termination engage another builder and recover from the defaulting builder the reasonable costs of the works to the extent that that cost exceeds that which would have been otherwise payable under the contract. If the reasonable cost of the works is less than that which would have been otherwise payable then the amount of the difference will be a debt payable by the owner to the builder. In my view the Building Contract is not an entire one.
In any event, in my view on an objective analysis of the facts the parties intended that the respondent would be entitled to payment for work performed and the applicant was obliged to pay for such work if properly performed. In addition the applicant was entitled to a return of the deposit and excess or to have those two amounts set off against the respondent's outstanding invoices. In other respects the Building Contract was "off altogether" (to use the phrase of Rowlatt J in Pearl Mill Co Ltd v Ivy Tannery Co Ltd [1919] IKB78).
The respondent contends that if the Tribunal finds that the Building Contract was abandoned by the parties, a party cannot seek damages for the loss of the bargain under the contract. I agree with that submission. I add that the applicant's case for damages based upon the additional costs it incurred with Dankav depends upon the applicant being able to establish that its conduct did not involve discharging the respondent from future performance of the contract. However, in my view the facts which I find constitute an abandonment of the contract by the parties also involve the conclusion that the respondent was relieved of its obligations to complete the works under the Building Contract.
Furthermore the respondent contends that for a party to claim more than nominal damages for breach of contract that party must prove readiness and willingness to perform all concurrent obligations (Foran v Wright (1989) 168CLR385 at 402, 430-431, 437). The respondent contends that for the applicant to be in a position to properly claim the Dankav costs, the applicant (assuming there was repudiatory conduct by the respondent) should have either terminated the contract pursuant to its terms or unequivocally accepted the repudiatory conduct and terminated. The respondent contends the applicant did neither and instead conducted itself so that it, with the respondent, abandoned the contract. I agree with the respondents submissions.
The applicant contends that if it is held that the respondent breached the Building Contract the applicant is entitled to the cost of completing the Building Contract with Dankav. If I am wrong in my conclusion that the contract was abandoned and if the correct position is that the respondent breached the contract entitling the applicant to the damages sought by the applicant there is in my view a significant difficulty for the applicant. The difficulty to which I refer is that the work undertaken by Dankav was in my view different from the work required to be undertaken by the respondent. Mr Mackenzie's evidence (to which I have already made mention) referred to differences between the work required under the Building Contract and the work undertaken by Dankav. In addition to the work mentioned earlier Mr Mackenzie referred to the reconstruction of each of the 23 balconies and other items which the respondent contends were not works undertaken by the respondent. The respondent contends that the evidence adduced by the applicant does not show that the work undertaken by Dankav was work which was necessary and reasonable for the purposes of making the work comply with the Building Contract. I agree with the respondent's submission and I find that the evidence of what Dankav charged is not evidence sufficient to enable the Tribunal to assess what it would cost the applicant to put the applicant in the same position as the applicant would have been in had the Building Contract been properly and fully performed.
The applicant seeks damages for breach of statutory warranties. I have already dealt with the claim in respect of the items identified in the Third Conclave Report and found that the applicant is entitled to $7,075.00. I also add the applicant submits that where the respondent carried out a lesser scope of works the applicant should be entitled to a refund of the monies paid on the basis that the applicant was entitled to have the contractual obligations properly performed. The applicant relies on the High Court decision in Tabcorp v Bowen Investments [2009] HCA8 236 CLR272. The applicant submits that the changes to the scope of works were not approved by the applicant and were instead unilateral actions by the respondent. However, the evidence of Mr Platt was to the contrary in that he stated he had the approval of Mr Fillery. Mr Fillery took a very close interest in the work and I am of the view that Mr Platt's evidence is to be accepted.
The applicant also contends it is entitled to $99,000.00 for general damages or an amount equivalent to the amount paid to the respondent for those items on the basis that the "works were of no value to the Owners Corporation as they have been redone by Dankav". The amount claimed is $99,000.00 being an amount which the applicant contends was admitted by Mr Anderson (the respondents expert) at the first conclave. The applicant seeks to argue that the evidence of both parties experts at the second and third conclaves and at the hearing are speculative and of limited value because they had the disadvantage of inspecting the property without satisfactory photographic records and at a time when the rectification work had already been carried out.
In my view this submission is inconsistent with the ruling I made at the hearing concerning the evidence of Mr Oke and the first conclave report and I do accept that the applicant is able to rely on the alleged admission now contended for. The applicant chose to rely on Mr Taber's evidence and it is on the basis of that evidence that I have assessed the applicants claim.
CONCLUSION
As a result of the findings I have made and the respondents consent in respect of the excess and the deposit, the applicant is entitled to:
(1) $ 1,075.00 - as agreed between the parties for items 6, 8, 9 and 10.
(2) $ 6,000.00 - the amount found to be due in respect of item 6.1.
(3) $ 6,500.00 - for the excess paid to the respondent.
(4) $33,721.00 - for the deposit paid to the respondent.
$47,296.00 - total
On the question of costs, I will consider an appropriate order after receipt of written submissions from the parties.
S Westgarth
Deputy President
Civil and Administrative Tribunal of New South Wales
10 January 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 07 March 2014
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